The New ‘Joint Employer’ Standard Postponed: Stay Tuned For A Court Ruling

by | Feb 26, 2024 | Courts, Industry, Labor Relations Ink, Labor Relations Insight, Legal, NLRB, Retail, Service Industry, Union Organizing

Last November, the National Labor Relations Board (NLRB) delivered some of its trademark rulemaking whiplash with a new final rule to considerably increase the number of businesses defined as “joint employers.” Companies will easily meet the new definition by possessing the ability to control at least one key employment term (pay, scheduling, etc.) of workers shared with other companies. This overly broad definition could tear a tornado-shaped hole through many industries, from hospitality and retail to healthcare and fast food restaurants.

The latter category, of course, is already grappling with the minimum wage mess in California and does not need any more horsing around from the NLRB. Heck, the board’s expanded definition could destroy fast-food franchise models. Any company that uses contracted or app-based delivery drivers would similarly feel pain. The new rule could also lead to an untold number of layoffs, harming workers and businesses.

Why is this attempted switcheroo happening?

Let’s get real: The new rule is a tactic by GC Jennifer Abruzzo to grease the wheels of unionization at all costs, including the following: (1) By forcing non-unionized companies to bargain with unions that do not even represent their workers; (2) By making these companies jointly liable for unfair labor charges against businesses that employ the same worker.

Businesses fight back: An industry coalition, including the U.S. Chamber of Commerce, sued over the new rule, and the original Dec. 26 effective date was pushed back until February. Now, that deadline has been further extended. All eyes remain on an impending ruling, but here is where the matter currently stands:

  • U.S. District Judge J. Campbell Barker, a Texas-based Trump appointee, pushed the rule’s effective date to March 11 after hearing arguments from the industry coalition. Their main argument characterizes the new rule as violating federal labor law by reverting to the common law interpretation of a joint employer.
  • The Eastern District of Texas federal courts tend to lean more favorably towards business interests, and that’s precisely why the NLRB wanted to transfer the case to the D.C. Circuit Court of Appeals, which previously favored a broadened definition.
  • Judge Barker hasn’t tipped his hand on which way he will swing. Still, he has expressed concerns about how the rule could “complicate collective bargaining” and force businesses to bargain with a union representing janitorial staffers from a third-party agency who clean their office buildings. It sounds preposterous, yes, but possible.

The irony here is that Abruzzo’s endgame – to require joint employers that have successfully warded off organizing activity to still sit at the bargaining table – makes a mockery of the union election process and democracy itself. Then again, the NLRB is already doing this with Cemex, so at least the board is being consistent or, as the saying goes, “on brand.”

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